1
EXHIBIT 1.1
8,500,000 Shares of Common Stock
XXX.XXX, INC
UNDERWRITING AGREEMENT
May ___, 1999
BEAR, XXXXXXX & CO. INC.
XXXXX XXXXX XXXXXX & COMPANY LLC
CIBC WORLD MARKETS CORP.
as Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Dear Sirs:
XXX.XXX, Inc., a corporation organized and existing under the
laws of Delaware (the "Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to the several underwriters named in Schedule I
hereto (the "Underwriters") an aggregate of 8,500,000 shares (the "Firm Shares")
of the Company's common stock, par value $0.001 per share (the "Common Stock")
1
2
and, for the sole purpose of covering over-allotments in connection with the
sale of the Firm Shares, at the option of the Underwriters, up to an additional
1,275,000 shares (the "Additional Shares") of Common Stock. The Firm Shares and
any Additional Shares purchased by the Underwriters are referred to herein as
the "Shares." The Shares are more fully described in the Registration Statement
referred to below.
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and may have filed an
amendment or amendments thereto, on Form S-1 (No. 333-75687), for the
registration of the Shares under the Securities Act of 1933, as amended (the
"Act"). Such registration statement, including the prospectus, financial
statements and schedules, exhibits and all other documents filed as a part
thereof, as amended at the time of effectiveness of the registration statement,
including any information deemed to be a part thereof as of the time of
effectiveness pursuant to paragraph (b) of Rule 430A or Rule 434 of the Rules
and Regulations of the Commission under the Act (the "Regulations"), is herein
called the "Registration Statement" and the prospectus, in the form first filed
with the Commission pursuant to Rule 424(b) of the Regulations or filed as part
of the Registration Statement at the time of effectiveness if no Rule 424(b) or
Rule 434 filing is required, is herein called the "Prospectus." The term
"preliminary prospectus" as used herein means a preliminary prospectus as
described in Rule 430 of the Regulations. All references in this Agreement to
the Registration Statement, a preliminary prospectus, the Prospectus, or any
amendments or supplements to any of the foregoing, shall include any copy
thereof filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval System ("XXXXX").
(b) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering of the
Shares nor, to the best of the Company's knowledge, instituted proceedings for
that purpose. At the time of the effectiveness of the Registration Statement or
the effectiveness of any post-effective amendment to the Registration Statement,
when the Prospectus is first filed with the Commission pursuant to Rule 424(b)
or Rule 434 of the Regulations, when any supplement to or amendment of the
Prospectus is filed with the Commission and at the Closing Date and the
Additional Closing Date, if any (as hereinafter respectively defined), the
Registration Statement and the Prospectus and any amendments thereof and
supplements thereto complied or will comply in all material respects with the
applicable provisions of the Act and the Regulations and does not or will not
contain an untrue statement of a material fact and does not or will not omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein (i) in the case of the Registration Statement, not
misleading and (ii) in the case of the Prospectus, in light of the circumstances
under which they were made, not misleading. When any related preliminary
prospectus was first filed with the Commission (whether filed as part of the
registration statement for the registration of the Shares or any amendment
thereto or pursuant to Rule 424(a) of the Regulations) and when any amendment
thereof or supplement thereto was first filed with the Commission, such
preliminary prospectus and any amendments thereof and supplements thereto
complied in all material respects with the applicable provisions of the Act and
the Regulations and did not contain an untrue statement of a material fact and
did not omit to state any material fact
2
3
required to be stated therein or necessary in order to make the statements
therein in light of the circumstances under which they were made not misleading.
The Prospectus and any preliminary prospectus delivered to the Underwriters for
use in connection with the offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX, except
to the extent permitted by Regulation S-T under the Act. No representation and
warranty is made in this subsection (b), however, with respect to any
information contained in or omitted from the Registration Statement or the
Prospectus or any related preliminary prospectus or any amendment thereof or
supplement thereto in reliance upon and in conformity with information furnished
in writing to the Company by or on behalf of any Underwriter through you as
herein stated expressly for use in connection with the preparation thereof. If
Rule 434 is used, the Company will comply with the requirements of Rule 434.
(c) The Company does not have any subsidiaries and does not
own or control, directly or indirectly, any interest in any other corporation,
association or other business entity.
(d) Xxxxxx Xxxxxxxx LLP, who have expressed their opinion on
the audited financial statements and supporting schedules included in the
Registration Statement, are independent public accountants as required by the
Act and the Regulations.
(e) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as set forth
or contemplated in the Registration Statement and the Prospectus, there has been
no material adverse change or any development involving a prospective material
adverse change in the business, prospects, properties, operations, condition
(financial or other) or results of operations of the Company (a "Material
Adverse Change"), whether or not arising from transactions in the ordinary
course of business, and since the date of the latest balance sheet presented in
the Registration Statement and the Prospectus, the Company has not incurred or
undertaken any liabilities or obligations, direct or contingent, which are
material to the Company, except for liabilities or obligations which are
reflected in the Registration Statement and the Prospectus.
(f) This Agreement and the transactions contemplated herein
have been duly and validly authorized by the Company, and this Agreement has
been duly and validly executed and delivered by the Company.
(g) The execution, delivery, and performance of this Agreement
and the consummation of the transactions contemplated hereby do not and will not
(i) conflict with or result in a breach of any of the terms and provisions of,
or constitute a default (or an event which with notice or lapse of time, or
both, would constitute a default) under, require approval or consent under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to the terms of (A) any agreement,
instrument, contract, indenture, mortgage, lease, license, franchise,
arrangement or other understanding to which the Company is a party or to which
any of its properties or assets are subject, (B) any governmental franchise,
license, permit heretofore issued to the Company, (ii) violate or conflict with
any provision of the Amended and Restated Certificate of Incorporation or Bylaws
of
3
4
the Company or (iii) violate or conflict with any judgment, decree, order,
statute, rule or regulation of any court or any public, governmental or
regulatory agency or body having jurisdiction over the Company or any of its
respective properties or assets; which violation or conflict would have a
Material Adverse Effect (as defined below).
(h) No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or any public,
governmental or regulatory agency or body having jurisdiction over the Company
or any of its respective properties or assets is required for the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby, including the issuance, sale and delivery of
the Shares to be issued, sold and delivered by the Company hereunder, except the
registration under the Act of the Shares and such consents, approvals,
authorizations, orders, registrations, filings, qualifications, licenses and
permits as may be required by the National Association of Securities Dealers,
Inc. or under state securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters.
(i) All of the outstanding shares of Common Stock are duly and
validly authorized and issued, fully paid and non-assessable and were not issued
and are not now in violation of or subject to any preemptive or similar rights.
The Shares, when issued, delivered and sold in accordance with this Agreement,
will be duly and validly issued and outstanding, fully paid and nonassessable,
and will not have been issued in violation of or be subject to any preemptive or
similar rights; and as of the date of the Prospectus and the Closing Date,
except as described in or expressly contemplated by the Prospectus, there are no
outstanding rights (including, without limitation, preemptive rights), warrants
or options to acquire, or instruments convertible into or exchangeable for, any
shares of capital stock or other equity interests in the Company, or any
contract, commitment, agreement, understanding or arrangement of any kind
relating to the issuance of any capital stock of the Company.
(j) The Company had, at __________, 1999, an authorized and
outstanding capitalization as set forth under the heading "Capitalization" in
the Registration Statement and the Prospectus. The Common Stock, the Firm Shares
and the Additional Shares conform to the descriptions thereof contained in the
Registration Statement and the Prospectus. The form of certificates for the
Shares are in due and proper form under the Delaware General Corporation Law.
(k) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware. The Company is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its business
makes such qualification necessary, except for those failures to be so qualified
or in good standing that will not in the aggregate have a material adverse
effect, or any development involving a prospective material adverse effect, on
the business, prospects, properties, operations, condition (financial or other),
stockholders' equity or results of operations on the Company (a "Material
Adverse Effect"). The Company has all requisite corporate power and authority,
and all necessary consents, approvals, authorizations, orders, registrations,
qualifications, licenses
4
5
and permits of and from all public, regulatory or governmental agencies and
bodies, to own, lease and operate its properties and conduct its business as now
being conducted and as described in the Registration Statement and the
Prospectus, except as would not result in a Material Adverse Effect. No such
consent, approval, authorization, order, registration, qualification, license or
permit contains a materially burdensome restriction not adequately disclosed in
the Registration Statement and the Prospectus. There are no statutes,
regulations, contracts or other documents applicable to the Company that are
required to be described in the Registration Statement or Prospectus or to be
filed as exhibits to the Registration Statement that are not described or filed
as required. The Company is in compliance with all applicable foreign, federal,
state and local laws, orders, rules, regulations, ordinances and directives,
except where the failure to be so in compliance would not have a Material
Adverse Effect.
(l) The Company is not in violation of any provision of its
Amended and Restated Certificate of Incorporation or Bylaws or in breach of, or
in default under (nor has any event occurred that with notice, lapse of time, or
both, would constitute a breach of, or default under), any provision of any
agreement (including any exclusivity provision contained therein), instrument,
franchise, license or permit to which the Company is a party or by which any of
its properties or assets may be bound or affected or any judgment, decree,
order, statute, rule or regulation of any court or any public, governmental or
regulatory agency or body having jurisdiction over the Company or any of its
properties or assets, which breach or default would have a Material Adverse
Effect.
(m) Except as described in the Prospectus, there is no
litigation, arbitration, proceeding, investigation or claim to which the Company
is a party or to which any property or assets of the Company are subject or
which is pending or, to the knowledge of the Company, threatened or contemplated
against or otherwise affecting the Company that might result in a Material
Adverse Effect or which is required to be disclosed in the Registration
Statement and the Prospectus.
(n) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which constitutes or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Shares or a violation of Regulation M under the Exchange Act.
(o) The financial statements, including the notes thereto, and
supporting schedules included in the Registration Statement and the Prospectus
present fairly the financial position of the Company as of the dates indicated
and the results of its operations of the Company for the periods specified;
except as otherwise stated in the Registration Statement, said financial
statements have been prepared in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis; and the supporting schedules
included in the Registration Statement present fairly the information required
to be stated therein. The selected financial data and the summary financial data
included in the Prospectus present fairly the information shown therein and have
been compiled on a basis consistent with that of the financial statements
included in the Registration Statement. The pro forma financial statements and
5
6
other pro forma financial information included in the Registration Statement and
the Prospectus present fairly the information shown therein, have been prepared
in accordance with the Commission's rules and guidelines with respect to pro
forma financial statements, have been properly compiled on the pro forma bases
described therein, and, in the opinion of the Company, the assumptions used in
the preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein. No other financial statements are required by Form S-1 or otherwise to
be included in the Registration Statement or the Prospectus other than those
included therein.
(p) Except as described in the Prospectus or except as may
have been properly waived, no holder of securities of the Company has any rights
to cause the Company to issue to it, or register pursuant to the Act, any
securities of the Company because of the filing of the Registration Statement in
connection with the sale of the Shares contemplated hereby or otherwise, nor
does any such holder of securities of the Company have preemptive rights or
other rights to purchase any of the Shares.
(q) The Company is not, and upon consummation of the
transactions contemplated hereby and the application of the proceeds therefrom
as described in the Prospectus will not be, subject to registration as an
"investment company" under the Investment Company Act of 1940.
(r) The Shares have been approved for quotation on the
National Association of Securities Dealers Automated Quotation ("Nasdaq")
National Market system, subject only to official notice of issuance.
(s) Except as described in the Registration Statement and the
Prospectus, the Company owns or possesses valid and enforceable licenses or
other rights to use all inventions, patents, patent applications, trademarks,
service marks, trade names, copyrights, technology, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) proprietary techniques (including processes
and substances) and other intellectual property rights necessary to conduct the
business now conducted or presently contemplated to be conducted by the Company
and its subsidiaries, taken as a whole, as described in the Registration
Statement and the Prospectus, except where the failure to own or possess such
rights would not have a Material Adverse Effect ("Intellectual Property"); other
than as described in the Registration Statement and the Prospectus: (i) to the
Company's knowledge there are no third parties who have any rights in the
Intellectual Property that could preclude the Company from conducting its
business as currently conducted or as presently contemplated to be conducted as
described in the Registration Statement and the Prospectus; (ii) there are no
pending or, to the Company's knowledge, threatened actions, suits, proceedings,
investigations or claims by others challenging the rights of the Company or (if
the Intellectual Property is licensed) the licensor thereof in any Intellectual
Property owned or licensed to the Company; (iii) the Company and (if the
Intellectual Property is licensed) to the Company's knowledge the licensor
thereof has not infringed, or received any notice of infringement of or conflict
with, any rights of others with respect to the Intellectual Property; and (iv)
there is no dispute between the Company or any licensor and any third parties
with respect to
6
7
any Intellectual Property. True and correct copies of all material licenses and
other material agreements between the Company and any third party relating to
the Intellectual Property, and all amendments and supplements thereto, have been
provided to the Underwriters.
(t) Except as disclosed in the Registration Statement and the
Prospectus, (i) the Company has good and marketable title to all properties
(real and personal) owned by the Company, free and clear of all mortgages,
pledges, liens, security interests, claims, restrictions or encumbrances of any
kind, and (ii) all properties held under lease or license by the Company are
held under valid, subsisting and enforceable leases or licenses. No real
property owned, leased, licensed or used by the Company lies in an area that is,
or to the best knowledge of the Company will be, subject to zoning, use or
building code restrictions that would prohibit, and no state of facts relating
to the actions or inaction of another person or entity or his, her or its
ownership, leasing, licensing or use of such real property in the business of
the Company as presently conducted or as the Prospectus indicates are
contemplated to be conducted.
(u) No relationship, direct or indirect, exists between or
among the Company, on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company, on the other hand, which is required by
the Act to be described in the Registration Statement and the Prospectus which
is not so described.
(v) Neither the Company, nor, to the best of the Company's
knowledge, any director, officer, agent, employee or other person associated
with or acting on behalf of the Company has used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provisions of the Foreign Corrupt Practices Act of 1972; or
made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
(w) The Company is in compliance with all environmental,
safety or similar laws or regulations applicable to them or their business or
property relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants, except
where such noncompliance would not, individually or in the aggregate, have a
Material Adverse Effect.
(x) There are no existing or, to the knowledge of the Company,
threatened labor disputes with the employees of the Company.
(y) Each employee benefit plan within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), that is maintained, administered or contributed to by the Company or
any of its affiliates, consultants or third parties with whom the Company has
contracted to provide employees or human resource services for employees or
former employees of the Company and its affiliates has been maintained in
compliance with its terms and the requirements of any applicable statutes,
orders, rules and regulations, including but not limited to ERISA and the
Internal Revenue Code of 1986, as amended ("Code"). No prohibited transaction,
within the meaning of Section 406 of ERISA or
7
8
Section 4975 of the Code has occurred with respect to any such plan excluding
transactions effected pursuant to a statutory or administrative exemption. For
each such plan which is subject to the funding rules of Section 412 of the Code
or Section 302 of ERISA no "accumulated funding deficiency" as defined in
Section 412 of the Code has incurred, whether or not waived, and the fair market
value of the assets of each such plan (excluding for these purposes accrued but
unpaid contributions) exceeded the present value of all benefits accrued under
such plan determined using reasonable actuarial assumptions.
(z) The Company has filed all material federal, state and
foreign income and franchise tax returns required to be filed as of the date
hereof and have paid all taxes shown as due thereon, except to the extent such
taxes are (A) currently payable without penalty or interest or (B) being
contested in good faith, and there is no tax deficiency that has been asserted
against the Company. All tax liabilities are adequately provided for on the
books of the Company. There is no tax deficiency that has been asserted against
the Company.
(aa) The Company maintains insurance with insurers of
recognized financial responsibility of the types and in the amounts (i)
generally deemed adequate for its business and consistent with insurance
coverage maintained by similar companies in similar businesses and (ii) required
under any of the Company's agreements, licenses or other contracts, all of which
insurance is in full force and effect; the Company has no reason to believe that
it will not be able to renew its existing insurance as and when such coverage
expires or to obtain similar insurance adequate and customary for its business
and sufficient to satisfy any requirements of its contracts at a cost that would
not have a Material Adverse Effect.
(bb) The Company maintains systems of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets,
(iii) the access to assets of the Company is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(cc) The description of the Company's Year 2000 readiness set
forth under the heading "Year 2000 Issues" in the Management's Discussion and
Analysis of Financial Condition and Results of Operation section of the
Prospectus is accurate and complete in all material respects.
2. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company agrees to sell to the Underwriters and the Underwriters,
severally and not jointly, agree to purchase from the Company, at a purchase
price per share of $_______, the number of Firm Shares set forth opposite the
respective names of the Underwriters in Schedule I hereto plus any additional
8
9
number of Shares which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of
certificates for, the Shares shall be made at the office of Xxxxxxxx & Xxxxxxxx
LLP, 5200 Republic Plaza, 000 Xxxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000, or at
such other place as shall be agreed upon by you and the Company, at 10:00 A.M.
New York time on the third or fourth business day (as permitted under Rule
15c6-1 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (unless postponed in accordance with the provisions of Section 9 hereof)
following the date of the effectiveness of the Registration Statement (or, if
the Company has elected to rely upon Rule 430A of the Regulations, the third or
fourth business day (as permitted under Rule 15c6-1 under the Exchange Act)
after the determination of the initial public offering price of the Shares), or
such other time not later than ten business days after such date as shall be
agreed upon by you and the Company (such time and date of payment and delivery
being herein called the "Closing Date"). Payment shall be made to the Company by
wire transfer in same day funds, against delivery to you for the respective
accounts of the Underwriters of certificates for the Shares to be purchased by
them. Certificates for the Shares shall be registered in such name or names and
in such authorized denominations as you may request in writing at least two full
business days prior to the Closing Date. The Company will permit you to examine
and package such certificates for delivery at least one full business day prior
to the Closing Date. If you so elect, delivery of the Firm Shares purchased from
the Company may be made by credit through full fast transfer to the accounts at
The Depository Trust Company designated by you.
(c) In addition, the Company hereby grants to the Underwriters
the option to purchase up to 1,275,000 Additional Shares at the same purchase
price per share to be paid by the Underwriters to the Company for the Firm
Shares as set forth in this Section 2, for the sole purpose of covering
over-allotments in the sale of Firm Shares by the Underwriters. This option may
be exercised at any time, in whole or in part, on or before the thirtieth day
following the date of the Prospectus, by written notice by you to the Company.
Such notice shall set forth the aggregate number of Additional Shares as to
which the option is being exercised and the date and time, as reasonably
determined by you, when the Additional Shares are to be delivered (such date and
time being herein sometimes referred to as the "Additional Closing Date");
provided, however, that the Additional Closing Date shall not be earlier than
the Closing Date or earlier than the second full business day after the date on
which the option shall have been exercised nor later than the eighth full
business day after the date on which the option shall have been exercised
(unless such time and date are postponed in accordance with the provisions of
Section 9 hereof). Certificates for the Additional Shares shall be registered in
such name or names and in such authorized denominations as you may request in
writing at least two full business days prior to the Additional Closing Date.
The Company will permit you to examine and package such certificates for
delivery at least one full business day prior to the Additional Closing Date. If
you so elect, delivery of the Additional Shares purchased from the Company may
be made by credit through full fast transfer to the accounts at The Depository
Trust Company designated by you.
The number of Additional Shares to be sold to each Underwriter shall be
the number which bears the same ratio to the aggregate number of Additional
Shares being
9
10
purchased as the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule I hereto (or such number increased as set forth
in Section 9 hereof) bears to [insert the total number of Firm Shares being
purchased from the Company], subject, however, to such adjustments to eliminate
any fractional shares as you in your sole discretion shall make.
Payment for the Additional Shares shall be made by wire transfer in
same day funds at the offices of Xxxxxxxx & Xxxxxxxx LLP, 5200 Republic Plaza,
000 Xxxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000, or such other location as may be
mutually acceptable, upon delivery of the certificates for the Additional Shares
to you for the respective accounts of the Underwriters.
3. Offering.
(a) Upon your authorization of the release of the Firm Shares,
the Underwriters propose to offer the Firm Shares for sale to the public upon
the terms set forth in the Prospectus.
(b) The Company and the Underwriters hereby agree that up to
425,000 shares of the Firm Shares to be purchased by the Underwriters (the
"Directed Shares") shall be reserved for sale by the Underwriters to eligible
employees of and certain persons designated by the Company ("the Directed Shares
Purchasers"), as part of the distribution of the Shares by the Underwriters
subject to the terms of this Agreement, the applicable rules, regulations and
interpretations of the National Association of Securities Dealers, Inc. (the
"NASD") and all other applicable laws, rules and regulations, provided, however,
that under no circumstances will you or any other Underwriter be liable to the
Company or to any of the Directed Shares Purchasers for any action taken or
omitted in good faith in connection with transactions effected with regard to
the Directed Shares Purchasers. To the extent that such Directed Shares are not
orally confirmed for purchase by such persons by the end of the first day after
the date of this Agreement, such Directed Shares will be offered to the public
as part of the Underwritten Offering contemplated hereby.
4. Covenants of the Company. The Company covenants and agrees with the
Underwriters that:
(a) If the Registration Statement has not yet been declared
effective the Company will use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as promptly as
possible, and if Rule 430A is used or the filing of the Prospectus is otherwise
required under Rule 424(b) or Rule 434, the Company will file the Prospectus
(properly completed if Rule 430A has been used) pursuant to Rule 424(b) or Rule
434 within the prescribed time period and will provide evidence satisfactory to
you of such timely filing. If the Company elects to rely on Rule 434, the
Company will prepare and file a term sheet that complies with the requirements
of Rule 434.
The Company will notify you as promptly as possible (and, if
requested by you, will confirm such notice in writing) (i) when the Registration
Statement and any amendments thereto become effective, (ii) of any request by
the Commission for any amendment
10
11
of or supplement to the Registration Statement or the Prospectus or for any
additional information, (iii) of the mailing or the delivery to the Commission
for filing of any amendment of or supplement to the Registration Statement or
the Prospectus, (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any post-effective
amendment thereto or of the initiation, or the threatening, of any proceedings
therefor, (v) of the receipt of any comments from the Commission, and (vi) of
the receipt by the Company of any notification with respect to the suspension of
the qualification of the Shares for sale in any jurisdiction or the initiation
or threatening of any proceeding for that purpose. If the Commission shall
propose or enter a stop order at any time, the Company will make every
reasonable effort to prevent the issuance of any such stop order and, if issued,
to obtain the lifting of such order as soon as possible. The Company will not
file any amendment to the Registration Statement or any amendment of or
supplement to the Prospectus (including the prospectus required to be filed
pursuant to Rule 424(b)or Rule 434) that differs from the prospectus on file at
the time of the effectiveness of the Registration Statement before or after the
effective date of the Registration Statement to which you shall reasonably
object in writing after being timely furnished in advance a copy thereof.
(b) If at any time when a prospectus relating to the Shares is
required to be delivered under the Act any event shall have occurred as a result
of which the Prospectus as then amended or supplemented would, in the judgment
of the Underwriters or the Company after consultation with legal counsel,
include an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading, or
if it shall be necessary at any time to amend or supplement the Prospectus or
Registration Statement to comply with the Act or the Regulations, the Company
will notify you promptly and prepare and file with the Commission an appropriate
amendment or supplement (in form and substance satisfactory to you) that will
correct such statement or omission and will use its best efforts to have any
amendment to the Registration Statement declared effective as soon as possible.
(c) The Company will promptly deliver to you two conformed
copies of the Registration Statement, including exhibits and all amendments
thereto, and will maintain in the Company's files manually signed copies of such
documents for at least five years from the date of filing. The Company will
promptly deliver to each of the Underwriters such number of copies of any
preliminary prospectus, the Prospectus, the Registration Statement, and all
amendments of and supplements to such documents, if any, as you may reasonably
request.
(d) The Company will endeavor in good faith, in cooperation
with you, at or prior to the time of effectiveness of the Registration
Statement, to qualify the Shares for offering and sale under the securities laws
relating to the offering or sale of the Shares of such jurisdictions (domestic
or foreign) as you may designate and to maintain such qualification in effect
for so long as required for the distribution thereof; except that in no event
shall the Company be obligated in connection therewith to qualify as a foreign
corporation or to execute a general consent to service of process. The Company
will promptly advise you of the receipt by the Company of any notification with
respect to suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such purpose
11
12
and will use every reasonable effort to obtain the withdrawal of any order of
suspension as soon as possible.
(e) The Company will make generally available (within the
meaning of Section 11(a) of the Act) to its security holders and to you as soon
as practicable, but not later than 45 days after the end of its fiscal quarter
in which the first anniversary date of the effective date of the Registration
Statement occurs, an earnings statement (in form complying with the provisions
of Rule 158 of the Regulations) covering a period of at least twelve consecutive
months beginning after the effective date of the Registration Statement.
(f) During the period of 180 days following the date of the
Prospectus, the Company will not, without the prior written consent of Bear,
Xxxxxxx & Co. Inc., directly or indirectly, issue, sell, offer, contract or
grant any option to sell, pledge, transfer or otherwise dispose of or transfer,
or announce the offering of, or file any registration statement under the Act
(other than pursuant to registration statements on Form S-8 or other forms
solely to register employee benefit plans, or registration statements solely to
register shares permitted to be issued pursuant to clause (ii) below provided
that such shares remain subject to the restrictions on transfer set forth in
such clause (ii) for the applicable 180-day period) in respect of, any shares of
Common Stock, options or warrants to acquire shares of the Common Stock or
securities exchangeable or exercisable for or convertible into shares of Common
Stock (other than as contemplated by this Agreement with respect to the Shares);
provided, however, that the foregoing shall not apply to (i) the issuance of
shares of Common Stock or options to purchase Common Stock, or Common Stock
issued upon exercise of outstanding options, warrants or other rights, pursuant
to any stock option, warrant, stock bonus or other stock plan or arrangement
described in the Prospectus, but only if the holders of such shares, options,
warrants or shares issued upon exercising of such options agree in writing not
to sell, offer, contract or grant any option to sell (including without
limitation, any short sale), pledge, transfer or establish an open "put
equivalent position" within the meaning of Rule 16a-1(h) under the Exchange Act,
or otherwise dispose of any such shares during such 180-day period without the
prior written consent of Bear, Xxxxxxx & Co. Inc. or (ii) the issuance of shares
of Common Stock in connection with any acquisition of another company or in
connection with strategic transactions involving the Company and other entities
but only if the holders of such shares agree in writing not to sell, contract or
grant any option to sell (including without limitation any short sale), pledge,
transfer, or establish an open "put equivalent position" within the meaning of
Rule 16a-1(h) under the Exchange Act, or otherwise dispose of any such shares or
options during such 180-day period without the prior written consent of Bear,
Xxxxxxx & Co. Inc. The Company agrees not to waive any undertaking pursuant to
this paragraph or accelerate the vesting of options or warrants or release
restrictions on restricted stock during such 180-day period without the prior
written consent of Bear, Xxxxxxx & Co. Inc. In any event, unless Bear, Xxxxxxx &
Co. Inc. otherwise consents in writing, the Company will cause each of its
officers and directors and such of its stockholders, optionholders and
warrantholders as have been heretofore designated by you and listed on Schedule
II attached hereto to execute and deliver a letter agreement in the form of
Exhibit A hereto.
12
13
(g) During a period of three years from the effective date of
the Registration Statement, the Company will furnish to you copies of (i) all
reports to its stockholders; and (ii) all reports, financial statements and
proxy or information statements filed by the Company with the Commission or any
national securities exchange.
(h) The Company will apply the proceeds from the sale of the
Shares as set forth under "Use of Proceeds" in the Prospectus.
(i) The Company will use its best efforts to cause the Shares
to continue to be qualified for quotation on the Nasdaq National Market system.
(j) The Company will file with the Commission its periodic
reports pursuant to Section 13 or Section 15 of the Exchange Act such
information as may be required pursuant to Rule 463 of the Regulations.
(k) The Company, during the Prospectus Delivery Period, will
file, on a timely basis, with the Commission and the Nasdaq National Market all
reports and documents required to be filed under the Exchange Act.
(l) The Company shall engage and maintain, at its expense, a
registrar and transfer agent for the Common Stock.
(m) The Company will use its best efforts to ensure that the
Directed Shares are restricted as required by the NASD or the NASD's rules from
sale, transfer, assignment, pledge or hypothecation for a period of three months
following the date of this Agreement. The Underwriters will notify the Company
as to which persons will need to be so restricted. At the request of the
Underwriters, the Company will direct the transfer agent to place a stop
transfer restriction upon such securities for such a period of time. Should the
Company release, or seek to release, from such restrictions any of the Directed
Shares, the Company agrees to reimburse the Underwriters for any reasonable
expenses (including, without limitation, legal expenses) they incur in
connection with such release.
Bear, Xxxxxxx & Co. Inc., on behalf of the several Underwriters, may, in
its sole discretion, waive in writing the performance by the Company of any
one or more of the foregoing covenants or extend the time for their performance.
5. Payment of Expenses. Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, the Company
hereby agrees to pay all costs and expenses incident to the performance of the
obligations of the Company hereunder, including those in connection with (i)
preparing, printing, duplicating, filing and distributing the Registration
Statement, as originally filed and all amendments thereof (including all
exhibits thereto), any preliminary prospectus, the Prospectus and any amendments
or supplements thereto (including, without limitation, fees and expenses of the
Company's accountants and counsel), the underwriting documents (including this
Agreement, the Agreement Among Underwriters and the Selling Agreement) and all
other documents related to the public offering of the Shares
13
14
(including those supplied to the Underwriters in quantities as hereinabove
stated), (ii) the issuance, transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon, (iii) the
qualification of the Shares under state or foreign securities or Blue Sky laws,
including the costs of printing and mailing a preliminary and final "Blue Sky
Survey" and the fees of counsel for the Underwriters and such counsel's
disbursements in relation thereto, (iv) quotation of the Shares on the Nasdaq
National Market system, (v) filing fees of the Commission and the NASD, (vi) the
cost of printing certificates representing the Shares, and (vii) the cost and
charges of any transfer agent or registrar.
6. Conditions of Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company herein contained, as of the date hereof and as of the
Closing Date (for purposes of this Section 6 "Closing Date" shall refer to the
Closing Date for the Firm Shares and any Additional Closing Date, if different,
for the Additional Shares), to the absence from any certificates, opinions,
written statements or letters furnished to you or to Xxxxxxxx & Xxxxxxxx LLP
("Underwriters' Counsel") pursuant to this Section 6 of any misstatement or
omission, to the performance by the Company of its obligations hereunder, and to
the following additional conditions:
(a) The Registration Statement shall have become effective not
later than (if pricing pursuant to Rule 430A) 5:30 P.M., New York time, on the
date of this Agreement, or at such later time and date as shall have been
consented to in writing by you; if the Company shall have elected to rely upon
Rule 430A or Rule 434 of the Regulations, the Prospectus shall have been filed
with the Commission in a timely fashion in accordance with Section 4(a) hereof;
and, at or prior to the Closing Date no stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereof shall have
been issued and no proceedings therefor shall have been initiated or threatened
by the Commission.
(b) At the Closing Date you shall have received the opinion of
Xxxxxx Godward LLP, counsel for the Company, dated the Closing Date addressed to
the Underwriters and in form and substance satisfactory to Underwriters'
Counsel, to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Delaware. Based on a certificate of the Company identifying the
relevant jurisdiction and without independent investigation with
respect to such factual matters, the Company is duly qualified and in
good standing as a foreign corporation in each jurisdiction in which
the character or location of its properties (owned, leased or licensed)
or the nature or conduct of its business makes such qualification
necessary, except for those failures to be so qualified or in good
standing which will not in the aggregate have a Material Adverse
Effect. The Company has all requisite corporate authority to own, lease
and license its respective properties and conduct its business as now
being conducted as described in the Registration Statement and the
Prospectus.
14
15
(ii) The Company has an authorized capital stock as set
forth in the Registration Statement and the Prospectus under the
caption "Capitalization" as of the date set forth therein. All of the
outstanding shares of Common Stock are duly and validly authorized and
issued, are fully paid and nonassessable, were not issued in violation
of or subject to any preemptive or, to such counsel's knowledge,
similar rights. The Shares to be delivered on the Closing Date have
been duly and validly authorized and, when delivered by the Company in
accordance with this Agreement, will be duly and validly issued, fully
paid and nonassessable and will not have been issued in violation of or
subject to any preemptive or, to such counsel's knowledge, similar
rights. The certificates for the shares of Common Stock in the form
filed as an exhibit to the Registration Statement are in due and proper
form under the Delaware General Corporation Law. The Common Stock,
including the Firm Shares and the Additional Shares, conforms to the
description of the Common Stock contained in the Registration Statement
and the Prospectus under the caption "Description of Capital Stock."
(iii) Except as described in or contemplated by the
Prospectus, to such counsel's knowledge (a) there are no outstanding
securities of the Company convertible or exchangeable into or
evidencing the right to purchase or subscribe for any shares of capital
stock of the Company and (b) there are no outstanding or authorized
options, warrants or similar agreements obligating the Company to issue
any shares of its capital stock or any securities convertible or
exchangeable into or evidencing the right to purchase or subscribe for
any shares of such capital stock; and except as described in the
Prospectus, to the knowledge of such counsel, no holder of any
securities of the Company or any other person has (1) the contractual
right to cause the Company to sell or otherwise issue to them, or to
permit them to underwrite the sale of, any of the Shares, (2) the
contracted right to have any Common Shares or other securities of the
Company included in the Registration Statement or (3) the right, which
has not been waived, as a result of the filing of the Registration
Statement, to require registration under the Act of any shares of
Common Stock or other securities of the Company.
(iv) The Shares to be sold under this Agreement to the
Underwriters are duly authorized for quotation on the Nasdaq National
Market system upon official notice of issuance.
(v) This Agreement has been duly and validly authorized,
executed and delivered by the Company.
(vi) To such counsel's knowledge, there is no litigation
or governmental or other action, suit, proceeding or investigation
before any court or before or by any public, regulatory or governmental
agency or body pending or overtly threatened against, or involving the
properties or business of, the Company that is of a character required
to be disclosed in the Registration Statement and the Prospectus which
has not been disclosed therein to the extent required by the Act and
the Regulations.
15
16
(vii) The execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated hereby
by the Company do not and will not (A) conflict with or result in a
breach of any of the terms and provisions of, or constitute a default
(or an event which with notice or lapse of time, or both, would
constitute a default) under, require approval or consent under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company pursuant to, any agreement,
instrument, contract, indenture, mortgage, lease, license, arrangement
or understanding known to such counsel and identified in the opinion to
which the Company is a party or by which its properties or assets are
subject the conflict or breach of which would have a Material Adverse
Effect on the Company or (B) violate or conflict with any provision of
the Amended and Restated Certificate of Incorporation or Bylaws of the
Company, or, to the best knowledge of such counsel, any judgment,
decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over the
Company or any of its properties or assets other than state securities
or Blue Sky laws (as to which such counsel need express no opinion). No
consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any public,
governmental, or regulatory agency or body having jurisdiction over the
Company or any of its properties or assets is required for the
execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, except for (1)
such as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the
Underwriters (as to which such counsel need express no opinion) and (2)
such as have been made or obtained under the Act.
(viii) The Registration Statement and the Prospectus and
any amendments thereof or supplements thereto (other than the financial
statements and schedules, other financial data included therein and the
statistical data derived therefrom, as to which no opinion need be
rendered) comply as to form in all material respects with the
requirements of the Act and the Regulations.
(ix) The statements under the captions "Description of
Capital Stock," "___________________________" and "Shares Eligible for
Future Sale" in the Prospectus, insofar as such statements constitute a
summary of documents referred to therein or matters of law, fairly
summarize the information called for with respect to such documents and
matters to the extent required by the Act and the Regulations.
(x) Such counsel does not know of any contracts or
documents required to be filed as exhibits to the Registration
Statement or described in the Registration Statement or the Prospectus
which are not so filed or described as required, and such contracts and
documents as are summarized in the Registration Statement or the
Prospectus are fairly summarized to the extent required by the Act and
the Regulations.
(xi) The Company is not, and will not become, as a result
of the consummation of the transactions contemplated by this Agreement,
and application of the
16
17
net proceeds therefrom as described in the Prospectus, required to
register as an investment company under the 1940 Act.
(xii) The Registration Statement is effective under the
Act, and, to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement or any
post-effective amendment thereof has been issued and no proceedings
therefor have been initiated or threatened by the Commission and all
filings required by Rule 424(b) of the Regulations have been made.
In addition, such opinion shall also contain a statement that such
counsel has participated in conferences with officers and representatives of the
Company, representatives of the independent public accountants for the Company
and the Underwriters at which the contents of the Registration Statement and the
Prospectus and related matters were discussed. While they have not independently
verified and are not passing upon the accuracy, completeness or fairness of the
Registration Statement or Prospectus, on the basis of the foregoing no facts
have come to the attention of such counsel which would lead such counsel to
believe that either the Registration Statement at the time it became effective
(including the information deemed to be part of the Registration Statement at
the time of effectiveness pursuant to Rule 430A(b) or Rule 434, if applicable),
or any amendment thereof made prior to the Closing Date as of the date of such
amendment, contained an untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus as of its date (or any
amendment thereof or supplement thereto made prior to the Closing Date as of the
date of such amendment or supplement) and as of the Closing Date contained or
contains an untrue statement of a material fact or omitted or omits to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no belief with
respect to the financial statements and schedules, other financial data included
therein and the statistical data derived therefrom).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance reasonably satisfactory to Underwriters'
Counsel) of other counsel reasonably acceptable to Underwriters' Counsel,
familiar with the applicable laws; (B) as to matters of fact, to the extent they
deem proper, on certificates of responsible officers of the Company and
certificates or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company and its subsidiaries, provided that copies of any
such statements or certificates shall be delivered to Underwriters' Counsel. The
opinion of such counsel for the Company shall state that the opinion of any such
other counsel is in form satisfactory to such counsel and, in their opinion, you
and they are justified in relying thereon.
(c) All proceedings taken in connection with the sale of the
Firm Shares and the Additional Shares as herein contemplated shall be
satisfactory in form and substance to you and to Underwriters' Counsel, and the
Underwriters shall have received from said
17
18
Underwriters' Counsel a favorable opinion, dated as of the Closing Date with
respect to the issuance and sale of the Shares, the Registration Statement and
the Prospectus and such other related matters as you may reasonably require, and
the Company shall have furnished to Underwriters' Counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(d) At the Closing Date you shall have received a certificate
of the Chief Executive Officer and Chief Financial Officer of the Company, dated
as of the Closing Date, to the effect that (i) the condition set forth in
subsection (a) of this Section 6 has been satisfied, (ii) as of the date hereof
and as of the Closing Date the representations and warranties of the Company set
forth in Section 1 hereof are true and correct in all respects, (iii) as of the
Closing Date the obligations of the Company to be performed hereunder on or
prior thereto have been duly performed, and (iv) subsequent to the respective
dates as of which information is given in the Registration Statement and the
Prospectus, the Company has not sustained any material loss or interference with
their respective businesses or properties from fire, flood, hurricane, accident
or other calamity, whether or not covered by insurance, or from any labor
dispute or any legal or governmental proceeding, and there has not been a
Material Adverse Change, or any development involving a Material Adverse Change,
except in each case as described in or contemplated by the Prospectus.
(e) At the time this Agreement is executed and at the Closing
Date, you shall have received a letter, from Xxxxxx Xxxxxxxx LLP, independent
public accountants for the Company, dated, respectively, as of the date of this
Agreement and as of the Closing Date addressed to the Underwriters and in form
and substance satisfactory to you, to the effect that: (i) they are independent
certified public accountants with respect to the Company within the meaning of
the Act and the Regulations and stating that the answer to Item 10 of the
Registration Statement is correct insofar as it relates to them; (ii) stating
that, in their opinion, the financial statements and schedules of the Company
included in the Registration Statement and the Prospectus and covered by their
opinion therein comply as to form in all material respects with the applicable
accounting requirements of the Act and the applicable published rules and
regulations of the Commission thereunder; (iii) on the basis of procedures
consisting of a reading of the latest available unaudited interim financial
statements of the Company, a reading of the minutes of meetings and consents of
the stockholders and board of directors of the Company and the committees of
such board subsequent to December 31, 1998, inquiries of officers and other
employees of the Company who have responsibility for financial and accounting
matters of the Company with respect to transactions and events subsequent to
December 31, 1998 and other specified procedures and inquiries to a date not
more than five days prior to the date of such letter, nothing has come to their
attention that would cause them to believe that: (A) the unaudited financial
statements and schedules of the Company presented in the Registration Statement
and the Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the applicable published rules
and regulations of the Commission thereunder or that such unaudited financial
statements are not fairly presented in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that of
the audited financial statements included in the Registration Statement and the
Prospectus; (B) with respect to the period subsequent to March 31, 1999 there
were, as of the
18
19
date of the most recent available monthly financial statements of the Company,
if any, and as of a specified date not more than five days prior to the date of
such letter, any changes in the capital stock or long-term indebtedness of the
Company or any decrease in the net current assets or stockholders' equity of the
Company, in each case as compared with the amounts shown in the most recent
balance sheet presented in the Registration Statement and the Prospectus, except
for changes or decreases which the Registration Statement and the Prospectus
disclose have occurred or may occur or which are set forth in such letter or (C)
that during the period from March 31, 1999 to the date of the most recent
available monthly financial statements of the Company, if any, and to a
specified date not more than five days prior to the date of such letter, there
was any decrease, as compared with the corresponding period in the prior fiscal
year, in total revenues, or total or per share net income, except for decreases
which the Registration Statement and the Prospectus disclose have occurred or
may occur or which are set forth in such letter; and (iv) stating that they have
compared specific dollar amounts, numbers of shares, percentages of revenues and
earnings, and other financial information pertaining to the Company set forth in
the Registration Statement and the Prospectus, which have been specified by you
prior to the date of this Agreement, to the extent that such amounts, numbers,
percentages, and information may be derived from the general accounting and
financial records of the Company or from schedules furnished by the Company, and
excluding any questions requiring an interpretation by legal counsel, with the
results obtained from the application of specified readings, inquiries, and
other appropriate procedures specified by you set forth in such letter, and
found them to be in agreement. In addition, such letter shall state that the pro
forma financial information included in the Registration Statement and the
Prospectus complies as to form in all material respects with the applicable
accounting requirements of the Act, including Rule 11-02 of Regulation S-X, and
that the pro forma adjustments have been properly applied to historical amounts
in the compilation of such pro forma financial information.
(f) Prior to the Closing Date the Company shall have furnished
to you such further information, certificates and documents as you may
reasonably request.
(g) You shall have received from each person who is a
director, officer or holder of capital stock, options or warrants of the Company
that has heretofore been designated by you and listed on Schedule II hereto an
agreement in the form of Exhibit A hereto, and such agreement shall be in full
force and effect on the Closing Date.
(h) At the Closing Date, the Shares shall have been approved
for quotation on the Nasdaq National Market system.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 6 shall not be in all material
respects reasonably satisfactory in form and substance to you and to
Underwriters' Counsel, all obligations of the Underwriters hereunder may be
cancelled by you at, or at any time prior to, the Closing Date and the
obligations of the Underwriters to purchase the Additional Shares may be
cancelled by you at, or at any time prior to, the Additional Closing Date.
19
20
Notice of such cancellation shall be given to the Company in writing, or by
telephone, telex or telegraph, confirmed in writing.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against
any and all losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but not limited to, and subject to section 7(d) below,
attorneys' fees and any and all expenses whatsoever incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or any
claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement for the registration of
the Shares, as originally filed or any amendment thereof, or any related
preliminary Prospectus or the Prospectus, or in any supplement thereto or
amendment thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the Company will not be liable in any such case to the extent but only to the
extent that any such loss, liability, claim, damage or expense arises out of or
is based upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
you expressly for use therein. This indemnity agreement will be in addition to
any liability which the Company may otherwise have including under this
Agreement.
(b) Each Underwriter severally, and not jointly, agrees to
indemnify and hold harmless the Company, each of the directors of the Company,
each of the officers of the Company who shall have signed the Registration
Statement, and each other person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against
any losses, liabilities, claims, damages and expenses whatsoever as incurred
(including but not limited to, and subject to section 7(d) below, attorneys'
fees and any and all expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), jointly or several, to which they or any of them may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for the registration of
the Shares, as originally filed or any amendment thereof, or any related
preliminary prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
20
21
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Underwriter through you expressly for use therein; provided,
however, that in no case shall any Underwriter be liable or responsible for any
amount in excess of the underwriting discount applicable to the Shares purchased
by such Underwriter hereunder. This indemnity will be in addition to any
liability which any Underwriter may otherwise have including under this
Agreement. The Company acknowledges that the statements set forth in the last
paragraph of the cover page and in the ______ paragraph[s] under the caption
"Underwriting" in the Prospectus constitute the only information furnished in
writing by or on behalf of any Underwriter expressly for use in the registration
statement relating to the Shares as originally filed or in any amendment
thereof, any related preliminary prospectus or the Prospectus or in any
amendment thereof or supplement thereto, as the case may be.
(c) In connection with the offer and sale of the Directed
Shares, the Company agrees, promptly upon a request in writing, to indemnify and
hold harmless the Underwriters from and against any and all losses, liabilities,
claims, damages and expenses incurred by them as a result of the failure of the
Directed Shares Purchasers to pay for and accept delivery of the Directed Shares
which, by the end of the day following the date of this Agreement, were subject
to a properly confirmed agreement to purchase such Directed Shares.
(d) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent it has
been prejudiced in any material respect by such failure). In case any such
action is brought against any indemnified party, and it notifies an indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent it may elect by written notice delivered
to the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by one of the indemnifying parties in connection
with the defense of such action, (ii) the indemnifying parties shall not have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties. Anything in
this subsection to the contrary notwithstanding, an indemnifying party shall not
be liable for any settlement of any claim or action effected without its written
consent; provided, however, that such consent was not unreasonably withheld.
21
22
8. Contribution. In order to provide for contribution in circumstances
in which the indemnification provided for in Section 7 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages, liabilities and expenses of
the nature contemplated by such indemnification provision (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company any contribution received by
the Company from persons, other than the Underwriters, who may also be liable
for contribution, including persons who control the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, officers of the
Company who signed the Registration Statement and directors of the Company) as
incurred to which the Company and one or more of the Underwriters may be
subject, in such proportions as is appropriate to reflect the relative benefits
received by the Company and the Underwriters from the offering of the Shares or,
if such allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in Section 7 hereof, in such proportion as is appropriate to reflect
not only the relative benefits referred to above but also the relative fault of
the Company and the Underwriters in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Underwriters shall be deemed to be in the same proportion
as (x) the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company and (y) the
underwriting discounts and commissions received by the Underwriters,
respectively, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company and of the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this Section
8, (i) in no case shall any Underwriter be liable or responsible for any amount
in excess of the underwriting discount applicable to the Shares purchased by
such Underwriter hereunder, and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. Notwithstanding the provisions of this Section 8 and the
preceding sentence, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages that such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. For purposes of this Section 8, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act shall have the same rights to
22
23
contribution as such Underwriter, and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to clauses (i) and (ii) of
this Section 8. Any party entitled to contribution will, promptly after receipt
of notice of commencement of any action, suit or proceeding against such party
in respect of which a claim for contribution may be made against another party
or parties, notify each party or parties from whom contribution may be sought,
but the omission to so notify such party or parties shall not relieve the party
or parties from whom contribution may be sought from any obligation it or they
may have under this Section 8 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its consent;
provided, however, that such consent was not unreasonably withheld.
9. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in its or
their obligation to purchase Firm Shares or Additional Shares hereunder, and if
the Firm Shares or Additional Shares with respect to which such default relates
do not (after giving effect to arrangements, if any, made by you pursuant to
subsection (b) below) exceed in the aggregate 10% of the number of Firm Shares
or Additional Shares, to which the default relates shall be purchased by the
nondefaulting Underwriters in proportion to the respective proportions which the
numbers of Firm Shares set forth opposite their respective names in Schedule I
hereto bear to the aggregate number of Firm Shares set forth opposite the names
of the nondefaulting Underwriters.
(b) In the event that such default relates to more than 10% of
the Firm Shares or Additional Shares, as the case may be, you may in your
discretion arrange for yourself or for another party or parties (including any
nondefaulting Underwriter or Underwriters who so agree) to purchase such Firm
Shares or Additional Shares, as the case may be, to which such default relates
on the terms contained herein. In the event that within five calendar days after
such a default you do not arrange for the purchase of the Firm Shares or
Additional Shares, as the case may be, to which such default relates as provided
in this Section 9, this Agreement or, in the case of a default with respect to
the Additional Shares, the obligations of the Underwriters to purchase and of
the Company to sell the Additional Shares shall thereupon terminate, without
liability on the part of the Company with respect thereto (except in each case
as provided in Section 5, 7(a) and 8 hereof) or the Underwriters, but nothing in
this Agreement shall relieve a defaulting Underwriter or Underwriters of its or
their liability, if any, to the other Underwriters and the Company for damages
occasioned by its or their default hereunder.
(c) In the event that the Firm Shares or Additional Shares to
which the default relates are to be purchased by the nondefaulting Underwriters,
or are to be purchased by another party or parties as aforesaid, you or the
Company shall have the right to postpone the Closing Date or Additional Closing
Date, as the case may be for a period, not exceeding five business days, in
order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus or in any other documents and
arrangements, and the
23
24
Company agrees to file promptly any amendment or supplement to the Registration
Statement or the Prospectus which, in the opinion of Underwriters' Counsel, may
thereby be made necessary or advisable. The term "Underwriter" as used in this
Agreement shall include any party substituted under this Section 9 with like
effect as if it had originally been a party to this Agreement with respect to
such Firm Shares and Additional Shares.
10. Survival of Representations and Agreements. All representations and
warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement, including the agreements contained in Section 5,
the indemnity agreements contained in Section 7 and the contribution agreements
contained in Section 8, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or any
controlling person thereof or by or on behalf of the Company, any of its
officers and directors or any controlling person thereof, and shall survive
delivery of and payment for the Shares to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8 and 11(d) hereof shall survive the termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective, upon the later of
when (i) you and the Company shall have received notification of the
effectiveness of the Registration Statement or (ii) the execution of this
Agreement. If either the initial public offering price or the purchase price per
Share has not been agreed upon prior to 5:00 P.M., New York time, on the fifth
full business day after the Registration Statement shall have become effective,
this Agreement shall thereupon terminate without liability to the Company or the
Underwriters except as herein expressly provided. Until this Agreement becomes
effective as aforesaid, it may be terminated by the Company by notifying you or
by you notifying the Company. Notwithstanding the foregoing, the provisions of
this Section 11 and of Sections 1, 5, 7 and 8 hereof shall at all times be in
full force and effect.
(b) You shall have the right to terminate this Agreement at
any time prior to the Closing Date or the obligations of the Underwriters to
purchase the Additional Shares at any time prior to the Additional Closing Date,
as the case may be, if (i) any domestic or international event or act or
occurrence has materially disrupted, or in your opinion will in the immediate
future materially disrupt, the market for the Company's securities or securities
in general, or (ii) if trading on the New York or American Stock Exchanges or on
Nasdaq shall have been suspended, or minimum or maximum prices for trading shall
have been fixed, or maximum ranges for prices for securities shall have been
required, on the New York or American Stock Exchanges or on Nasdaq by the New
York or American Stock Exchanges or Nasdaq, respectively, or by order of the
Commission or any other governmental authority having jurisdiction, or (iii) if
a banking moratorium has been declared by a state or federal authority or if any
new restriction materially adversely affecting the distribution of the Firm
Shares or the Additional Shares, as the case may be, shall have become
effective, or (iv) (A) if the United States becomes engaged in hostilities or
there is an escalation of hostilities involving the United States or there is a
declaration of a national emergency or war by the United States or (B) if there
24
25
shall have been such change in political, financial or economic conditions if
the effect of any such event in (A) or (B) as, in your judgment makes it
impracticable or inadvisable to proceed with the offering, sale and delivery of
the Firm Shares or the Additional Shares, as the case may be, on the terms
contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11
shall be by telephone, telex, or telegraph, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of
the provisions hereof (otherwise than pursuant to (i) notification by you as
provided in Section 11(a) hereof or (ii) Section 9(b) or 11(b) hereof), or if
the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by you, reimburse the Underwriters for all
out-of-pocket expenses (including the fees and expenses of their counsel),
incurred by the Underwriters in connection herewith.
12. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, or telexed or telegraphed and confirmed
in writing, to such Underwriter c/o Bear, Xxxxxxx & Co. Inc., 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Equity Syndicate; if sent to the Company,
shall be mailed, delivered, or telegraphed and confirmed in writing to XXX.XXX,
0000 Xxxxx Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000,
Attention: Xxxx X. Street.
13. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Underwriters and the Company and the controlling
persons, directors, officers, employees and agents referred to in Sections 7 and
8, and their respective successors and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Agreement or any provision herein contained.
The term "successors and assigns" shall not include a purchaser, in its capacity
as such, of Shares from any of the Underwriters.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, but without regard to
principles of conflicts of law.
15. Knowledge. As used in this Agreement, "to the Company's knowledge"
or "to the knowledge of the Company" means that the officers, directors and key
employees of the Company identified in the Registration Statement have actual
awareness or knowledge of such matter or a prudent individual could be expected
to discover or otherwise become aware of such fact or other matter in the course
of conducting a reasonably comprehensive investigation concerning the existence
of such fact or other matter.
25
26
If the foregoing correctly sets forth the understanding between you and
the Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
XXX.XXX
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Accepted as of the date first above written
BEAR, XXXXXXX & CO. INC.
VOLPE, BROWN, XXXXXX & COMPANY
CIBC WORLD MARKETS CORP.
on behalf of themselves and the other
Underwriters named in Schedule I hereto
Bear, Xxxxxxx & Co. Inc.
By:
------------------------------------
Name:
----------------------------------
26
27
EXHIBIT A
Bear, Xxxxxxx & Co., Inc.
Volpe, Brown, Xxxxxx & Company LLC
CIBC World Markets Corp.
as Representatives of the Several Underwriters
c/o Bear, Xxxxxxx & Co., Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: XXX.XXX, Inc. (the "Company")
Ladies and Gentlemen:
The undersigned is an owner of record or beneficially of certain shares
of Common Stock of the Company ("Common Stock") or securities convertible into
or exchangeable or exercisable for Common Stock. The Company proposes to carry
out a public offering of Common Stock (the "Offering") for which you will act as
the representatives (the "Representatives") of the underwriters. The undersigned
recognizes that the Offering will be of benefit to the undersigned and will
benefit the Company by, among other things, raising additional capital for its
operations. The undersigned acknowledges that you and the other underwriters are
relying on the representations and agreements of the undersigned contained in
this letter in carrying out the Offering and in entering into underwriting
arrangements with the Company with respect to this Offering.
In consideration of the foregoing, the undersigned hereby agrees that
the undersigned will not, without the prior written consent of Bear, Xxxxxxx &
Co. Inc. (which consent may be withheld in its sole discretion), directly or
indirectly, sell, offer, contract or grant any option to sell (including without
limitation any short sale), pledge, transfer, establish an open "put equivalent
position" within the meaning of Rule 16a-1(h) under the Securities Exchange Act
of 1934, as amended, or otherwise dispose of any shares of Common Stock, options
or warrants to acquire shares of Common Stock, or securities exchangeable or
exercisable for or convertible into shares of Common Stock, currently or
hereafter owned either of record or beneficially (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) by the undersigned, or publicly
announce the undersigned's intention to do any of the foregoing, for a period
commencing on March 26, 1999 and continuing to a date 180 days from the date of
the final prospectus for the Offering. The foregoing sentence shall not apply to
(A) the issuance of any shares of Common Stock upon the exercise of an option or
warrant or the conversion of a security held by you, (B) transfers of shares of
Common Stock to immediate family members or trusts, partnerships, limited
liability companies or other entities for the benefit of such family members, or
(C) transfers of shares of Common Stock to a wholly-owned subsidiary, parent,
general partner, limited partner, retired partner, member or retired member of
the undersigned, provided that in the case of (B) and (C) above, such transferee
takes such shares subject to all of
27
28
the provisions of this Lock-Up Agreement and agrees to be bound by the terms
hereof. The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock held by the undersigned except in
compliance with the foregoing restrictions. In the event that the Registration
Statement shall not have been declared effective on or before July 30, 1999,
this Lock-Up Agreement shall be of no further force or effect.
In addition, the undersigned hereby waives any and all notice
requirements and rights with respect to registration of securities pursuant to
any agreement, understanding or otherwise setting forth the terms of any
security of the Company held by the undersigned, including any registration
rights agreement to which the undersigned and the Company may be party, provided
that such waiver shall apply only to the proposed Offering, and any other action
taken by the Company in connection with the proposed Offering.
The undersigned hereby agrees that, to the extent that the terms of
this Lock-Up Agreement conflict with or are in any way inconsistent with any
registration rights agreement to which the undersigned and the Company may be
party, this Lock-Up Agreement supersedes such registration rights agreement.
This agreement is irrevocable and will be binding on the undersigned
and the respective successors, heirs, personal representatives and assigns of
the undersigned.
Dated: , 1999
--------------------------- -------------------------------------
Signature
-------------------------------------
Printed Name of Holder
28
29
SCHEDULE I
Number of Firm
Name of Underwriter Shares to be Purchased
Bear, Xxxxxxx & Co. Inc...............................................................
Volpe, Brown, Xxxxxx & Company........................................................
CIBC World Markets Corp...............................................................
Total................................................................................... 8,500,000
29
30
SCHEDULE II
Holdings of Stockholders, Directors,
Officers, Optionholders and Warrantholders
30
